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Nokia Q4 Profit Surges, Backs FY20 View, Sees Margin Growth Ahead; Stock Up

nokia feb06 lt

Shares of Nokia Corp. (NOK) were gaining around 3 percent in the trading in Finland after the company on Thursday reported that its fourth-quarter profit more than doubled from last year amid cost savings program, despite nearly flat sales.

Looking ahead for fiscal 2020, the Finnish telecom, IT, and consumer electronics company said it continues to expect adjusted earnings per share in a range of 0.25 euros plus or minus 5 cents, compared to the 0.22 euro earnings generated in fiscal 2019. The company projects fiscal 2020 adjusted operating margin of 9.5 percent plus or minus 1.5 percentage points. In the year 2019, the company's adjusted operating margin was 8.6 percent.

Over the long term, in 3 to 5 years, the company expects adjusted operating margin of 12 percent to 14 percent.

For the fourth quarter, net profit climbed to 563 million euros from 203 million euros in the previous-year quarter. Earnings per share increased to 0.10 euros from 0.03 euros in the prior-year period.

Adjusted earnings per share were 0.15 euros, compared to 0.13 euros a year ago. The results reflected continued progress related to the company's cost savings program, which resulted in lower operating expenses across Networks, Nokia Software and Nokia Technologies.

Operating profit surged 45 percent to 803 million euros from 552 million euros in the year-ago period. Operating margin increased 360 basis points to 11.6 percent.

Fourth-quarter net sales were 6.90 billion euros, up slightly from 6.87 billion euros last year. On a constant currency basis, net sales decreased 1 percent.

Excluding one-time licensing net sales in both quarters, net sales for the quarter grew 1 percent.

The strong 5G deal momentum continued into the quarter, and the company signed 15 5G commercial contracts.

Nokia's 5G technology also powered the launch of several live 5G networks.

In total, Nokia now has 66 commercial 5G deals and 19 live networks, and over 100 5G agreements.

Meanwhile, the company experienced relatively high 5G product costs in Mobile Access, as well as elevated levels of deployment services, consistent with being in the initial phase of 5G.

Nokia said its board expects to resume dividend distributions after the company's net cash position improves to about 2 billion euros.

Due to given typical cash seasonality, it would not expect to reach that level in the first three quarters of this year. After the fourth quarter of fiscal 2020, the Board will assess the possibility of proposing a dividend distribution for the financial year 2020.

In Finland, Nokia shares were trading at 3.72 euros, up 2.71 percent.

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